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Morning Commentary: Preferred stocks continue to tick higher; Torchmark notes free to trade
By Stephanie N. Rotondo
Seattle, March 30 – Preferred stocks continued to be firm in early midweek trading, extending the gains seen at the start of the week and furthered by the Federal Reserve chairman on Tuesday.
The Wells Fargo Hybrid and Preferred Securities index was up 17 basis points at mid-morning.
On Tuesday, Federal Reserve chairman Janet Yellen said the central bank would exercise caution when opting to raise interest rates in the future, taking into account not only domestic economic data, but global headwinds as well.
A trader said that in the wake of her comments, the likelihood of an April increase went from 11% to 4%. As a result, “people rushed back in” to the markets, pushing them higher.
But even as the markets have gotten a bump, the trader also remarked that the primary preferred stock space would likely be muted for the remainder of the week.
“There are no more deals this week, I was told,” he said. With it being month-end and Spring Break in some places, “everybody is taking a break.”
Of the deals already priced this week, Torchmark Corp.’s $300 million of 6.125% $25-par junior subordinated debentures due 2056 had freed up by mid-morning, according to a trader.
He saw the issue quoted at $25.15 bid, $25.22 offered.
The deal came upsized from $150 million and tight to the 6.25% price talk.
BofA Merrill Lynch, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC ran the books.
Meanwhile, the Gabelli Equity Trust Inc.’s $80 million of 5.45% series J cumulative redeemable preferreds – a deal priced Monday and freed Tuesday afternoon – were hanging in a $24.90 to $24.95 range.
UBS Securities LLC and Wells Fargo led that deal.
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